With every expense increasing more than the announced inflation rate, you might be wondering how you can come out on an ever-reducing budget.
Rita Cool, a certified financial planner at Alexander Forbes Financial Planning Consultants has a few tips for you on how to make your money stretch further this year.
- Make sure you have a budget. If you don’t know what you spend money on, you won’t know where you could find lost cash. Once you have identified where the money is going monthly you can decide how and where you can save
- Check your bank fees. Are you in the best structure for your needs? Are you paying for services that you never use? It is not impossible to move banks to get a better deal?
- Don’t draw cash from banks or ATMs other than your own to prevent extra service charges. Make sure you know what the transaction fees before you draw from till points or transfer money to family.
- Buy secondhand and sell items that you do not need to make extra cash and save on paying full price. Anything from school clothes and TVs can be bought and sold. Advertise properly to get the maximum amount so you can free up cash.
- Buy cash where possible, as the interest rates on hire-purchase items are very high. You can pay around 20% more for those items than the sticker price.
- Don’t try to keep up with your neighbours. Looks are deceiving. They might drive a fancy car but cannot afford furniture for the house or have no savings for the future.
- Shop around but don’t drive all over to get a ‘bargain’. The petrol spent to get the discount might not make it worthwhile. Buy long shelf life items such as washing powder and toilet paper when they are on sale.
- Use store coupons and discount vouchers. The main food retailers have loyalty programme structures that can be tailored to your specific spending patterns. Make sure you claim points or vouchers, but look out for monthly costs to belong to a rewards programme. Check that the monthly savings validate the cost; a reward scheme shouldn’t cost you money.
- Drive at the speed limit. It saves you on petrol and traffic fines, perhaps your life.
- Check your current insurances. Do an insurance rebroke. The cheapest premium isn’t always the best, so be aware of exclusions and excesses and make sure you can afford the excess if you need to claim.
- Check if you actually need a payout on your insurance sometime in the future. In most cases you can reduce your monthly premiums by not having a payout in the future. If you want a payout, save the extra premium in an investment product, not a risk product.
- Be wary of consolidating debt. You might pay a lower interest rate but it might well be over a longer period so the total interest paid will be higher. If you have debt issues, set up a debt plan with dates and goals to gradually reduce the debt little by little.
Source: Alexander Forbes. Image: Radio Dialogue